As expected, key petrol importers have decided to raise the petrol retail price by VND800 per litre, commencing from 0 am May 7.

With the price increases, A92 petrol is now selling at VND11,800/litre, A90 at VND11,600/litre, and A83 at VND11,400/litre. Meanwhile, kerosene, mazut and diesel prices remain unchanged as the State still keeps subsidization over these products.

In fact, people had heard about the price increase one day before the decision came into effect as the information had leaked out. Guessing about the price increases, sales agents tried to store up a big volume of petrol to make profit when the price increases. The Ministries of Finance and Trade had to set up a supervision board which is responsible for preventing from petrol speculation.

The information leaking had caused a headache to petrol importers and state management authorities. On the evening of May 6, the ministries and key petrol importers gathered to reconsider the time for petrol price increase. Several solutions were considered: either raising the retail prices sooner than previously planned (0 am May 7), or delaying the price increase plan for several days, so that speculators cannot make profit.

However, the ministries finally decided to raise the retail price as of May 7 as initially planned. Officials said that no one could buy petrol in big volume as a speculation thanks to the strict supervision over the petrol distribution.

What worries the ministries now not the speculation any more, but the possible big increase of the consumer price index (CPI) in May 2007.

A source said that key petrol importers previously asked for the price increase of VND1,000 per litre, however, their proposals were not accepted by the ministries.

The high CPI in May 2007 proves to be unavoidable, and at the recent meeting of the Taskforce on Domestic Market Management, officials also predicted that the petrol price hike would lead to the sharp price increases in May.

Nguyen Van Sang, Deputy Director of the Domestic Market Policy Department under the Ministry of Trade, said that since May 1, 2007, petrol traders have the right to define the selling prices as stipulated by the Decree 55. The Ministries of Trade and Finance have the right to intervene the market only when they find out the signs of unreasonable price increases.

Mr Sang said that the petrol price increase at this moment would certainly lead to the price increases of a lot of other goods and services. The CPI in April increased by 0.49% over March, making the CPI increase by 3.52% in the first four months of the year. The transport and postal services saw the biggest price increase in April, 1.05%, while other groups of goods and services saw the price increases of between 0.17% and 0.48%.

As the world’s petrol price keeps increasing, domestic petrol importers have been suffering from loss for the last two months. The Government has decided to lower the import tax from 10% to 5% on April 28, but the tax reduction proves to be not enough to cover the importers’ loss.

Source: VietnamNet